Embed Size (px)
DESCRIPTION
The European Investment Bank EIB presents challenges for financing innovation development in the water sector and potential instruments / mechanisms for doing so.
Citation preview
Stimulating investment in water innovation: the viewpoint of an international financial institution
Monica ScatastaHead, Water and Waste ManagementEUROPEAN INVESTMENT BANK
5 November 2014
Barcelona, Spain
Stimulating investment in water innovation: the viewpoint of an international financial institution
EIP Water Conference 2014Barcelona
Monica ScatastaHead, Water and Waste ManagementEUROPEAN INVESTMENT BANK
2EIP Water Conference 20145/11/2014
3
Largest source of loan financing to the sector over EUR 18bn loans signed in 2009-13
Annual average lending EUR 3.6 bn, (EUR 3.3 bn in EU) up from EUR 2.5 bn in 2004-08
About 90% of lending goes to projects in the EU, (outside the EU, excluding BRIICS, in line with other FIs)
On avg. EIB loans cover 30% of investment cost of water projects high leverage effect, blending
Flexibility: Lends to national/local authorities, public or private
companies, through intermediaries or directly (incl. PF) EIB group offers broad spectrum of instruments beyond loans
EIP Water Conference 20145/11/2014
EIB : The EU “Water Bank”
DRINKING W.
Life & economic support for human settlements
FOOD
ENERGY
INDUSTRY
WASTE
SEWAGE
RE-CYCLE, RECOVER
RE-USE, RECOVER
Resources & Environment
WATER
EU 2020 “A Resource Efficient Europe”
Blueprint for Europe’s Waters
CC Adaptation StrategyCOM on Circular Economy
Water-Food-
Energy Nexus
EU Policy DriversInternational Consensus
WATER
WATER
DevelopmentAgenda
Post-2015
EIP Water Conference 20145/11/2014 4
EIB: The EU BankManaging critical resources for sustainable growth
5EIP Water Conference 20145/11/2014
The Ernst &Young Market Study for EIP Water
Lack of incentives to water users►Water prices
do not reflect scarcity value
►Tariff structures and political pressure
►Price-control mechanisms
►Disparity between countries or regions
►Social aversion
Opportunities
► Raising awareness
► Higher quality standards
► Environmental requirements
Stringent regulations►High
compliance costs
►Long and expensive certification procedures and licensing processes
►No financial independence (and access to capital) for utilities
►Increasing standard
►Country specific regulation
Opportunities
► New regulations and requirements can encourage innovations
Market fragmentation ►Local players
and domestic market
►Specific processes
►Tendering processes and public procurement rules
►Municipalities are risk-averse and cost-oriented
►Multiplicity of regulations
Opportunities
► The fragmentation of the market allows new actors to enter it
Maturity of the sector► Adaptation of
existing technologies/solutions
►Necessary coordination in a vast interconnected network
Opportunities
► New regulatory and users’ requirements
► Renovation of existing and ageing infrastructure
Attractiveness for VCs► Capital
intensive with low margin
► Long time is required to market innovative ventures
► Lack of scalability of technologies
► Few information is available and a good understanding is necessary
► Limited exit opportunities
Opportunities
► Substantive economies / income can be made
► Financial incentives do exist to support innovations
E&Y Market Study Findings:Main barriers to accessing finance
6EIP Water Conference 20145/11/2014
►Option 1: Inclusion of water efficiency criteria in the EIB’s performance indicators
►Option 2: Development of a European performance guarantee scheme for innovative technologies
►Option 3 :Establishment of a dedicated water technology investment fund
7EIP Water Conference 20145/11/2014
All have pros/cons. They are still under discussion.
E&Y Market Study:The way forward – proposed options
8EIP Water Conference 20145/11/2014
Supporting innovation and innovating support at EIB
Joint initiative launched by the European Investment Bank Group (EIB and EIF) in
cooperation with the European Commission under Horizon 2020:
Facilitate and accelerate access to finance for innovative businesses and other innovative
entities in Europe
Providing a series of integrated and complementary financing tools and advisory services
covering the entire value chain of research and innovation in order to support investments
from the smallest to the largest enterprise
Available across all eligible sectors under Horizon 2020, in EU Member States and
Associated Countries
By 2020, InnovFin is expected to make over EUR 24bn of debt and equity financing
available to innovative companies to support EUR 48bn of final R&I investments.
InnovFin overview
What
Objective
How
For Whom
Amount
Own Resources
InnovFin European Commission
Aaa Aa A (Baa-) Ba B Caa
€ 3 bn € 3 bn
Equity/Debt(the EC provides a First Loss Piece )
InnovFin SME Guarantee
InnovFin MidCap GuaranteeInnovFin SME VC InnovFin MidCap
Growth FinanceInnovFin Large
Projects
RDI Advisory
What financing products are available?
• EIF will issue guarantees and counter-guarantees to selected financial
intermediaries, thus allowing them to provide loans, financial leases and loan
guarantees
• For innovative SMEs and Small Mid-Caps
• rolled out through financial intermediaries. Financial intermediaries will be
guaranteed against a portion of their potential losses by the EIB
• guarantees and counter-guarantees on debt financing <€50 million• for innovative midcaps (< 3000 FTEs)
• Direct long term senior, subordinated or mezzanine loans from EIB• Amount between €7.5 million < €25 million • for innovative larger midcaps (< 3000 FTEs), but also SMEs and small midcaps
• direct loans and guarantees from EIB for larger projects• Loan amount between EUR 25-300 million • for R&I projects emanating from larger firms; universities and public research
organisations; R&I infrastructures; PPP and SPVs
Some more product details…
HYDRO SPV 130/99
Issuer 1
Issuer 2
……….
Issuer 9
Issuance of Bonds
Subscription price
Remuneration and repayment of Bonds
Issuance of Notes
Subscription price
Interest and principal on the Notes
Liquidity and credit support on the Notes
EIB +
Investors
Cash reserve (20%) Veneto
Sviluppo Liquidity and credit
support on the Notes
Viveracqua Hydrobond: an innovative financial structure
DRINKING W.
Life & economic support for human settlements
FOOD
ENERGY
INDUSTRY
WASTE
SEWAGE
RE-CYCLE, RECOVER
RE-USE, RECOVER
Resources & Environment
WATER
EU 2020 “A Resource Efficient Europe”
Blueprint for Europe’s Waters
CC Adaptation StrategyCOM on Circular Economy
StrategicPrimary
Input
EU Policy DriversInternational Consensus
WATER
WATER
Water-Food-
Energy Nexus
EIP Water Conference 20145/11/2014 15
Back to circular thinking…
